AUSTRALIA is now the only country in the world with a permit to export feed grain to Indonesia after the ratification of a preferred trade agreement between the two countries earlier this week.
The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) was signed on Monday with a quota of Australian feed grain to Indonesia and a grains-specific economic co-operation initiative being just two of the key elements.
The new quota allowance includes 500,000 tonnes of feed grain, which can be a mix of wheat, barley or sorghum, growing at five per cent, year-on-year.
GrainGrowers chief executive officer David McKeon said Indonesia was traditionally Australia's biggest wheat market with annual trade volumes at about four million tonnes, however 2018 and 2019 volumes were significantly lower due to poor Australian seasons.
"In 2019, we didn't export as much as we usually do into Indonesia, mainly because a lot of Western Australia's export crop went in to east coast demand," Mr McKeon said.
"But when we do return to a big season, which fingers crossed will be 2020, we would expect a much higher amount of our wheat to go into Indonesia and that's why having that trade agreement in place is critical, because it allows for that next big crop.
"What this trade agreement does is make us the only country in the world that has feed grain access into the Indonesian market, so it really does position us well."
With Australia's export volumes to Indonesia decreasing over the past two years, other low cost production nations have started to play a strong position in the Indonesian market, mainly Argentina and Ukraine.
"The other really important element of IA-CEPA is the Australia-Indonesia Grains Partnership and that's about Australian and Indonesian industry and government working together to form stronger relationships," Mr McKeon said.
"It's about Australian industry working with our Indonesiam customers to ensure they have the best available technical capacity and advice on how to use Australian feed grain and milling grain.
"It will ensure that when they are looking at where to buy their grain, they really know how to get the best value out of Australian grain, meaning they'll seek it out because they have confidence in what we grow and how they can use it."
In the long term, IA-CEPA will continue to secure Australia as a preferred trading partner with its closest neighbour and biggest traditional wheat export partner.
"It ensures there is a trusted trading relationship and a sound footing for us to continue to provide a quality product in to Indonesia against strong competition for our competitor nations," Mr McKeon said.
IA-CEPA also supports growth and development towards Indonesia's food manufacturing, stockfeed and livestock sectors.
